Change of plan: Jeremy Hunt had previously ruled out tax cuts in the Autumn Statement
Business taxes are set to fall in the Autumn Statement in a bid to stimulate growth after the economy flatlined this summer.
Jeremy Hunt is reportedly planning to extend the ‘full expensing’ capital allowance scheme, which lets businesses claim back the costs of investment in IT equipment and machinery, on November 22.
But he will not extend the freeze on business rates, which will come as a blow to high street retailers and hospitality firms. They have warned that the tax will cost millions of pounds, resulting in price rises and site closures.
Hunt, who revealed the three-year ‘full expensing’ policy in the Spring Budget this year, had previously ruled out tax cuts in next week’s Autumn Statement due to public finance constraints.
However, there is more financial headroom than previously anticipated, with think-tank the Resolution Foundation putting the estimate at £13billion.
Figures set to be published on Wednesday are expected to show inflation slowed to 4.8 per cent in October – down from 6.7 per cent in the previous month. It would mean Prime Minister Rishi Sunak has met his promise to halve inflation by the end of this year two months early.
His second promise was to boost growth.
It comes after data released last week showed Britain’s economy stagnated over the summer.
The Office for National Statistics figures showed no GDP growth between July and September, upping the pressure on the Bank of England to cut interest rates from the 15-year high of 5.25 per cent.
The Financial Times has said that Hunt is mulling either a one-year extension to the full expensing regime beyond the 2026 deadline or a permanent change.
The 12-month extension is thought to be the most likely option at this time.
Retailers and hospitality firms have been lobbying for the freeze to business rates – a levy that firms pay on their property – to be extended.
But the pause looks set to be scrapped for big firms in order to fund the capital allowances changes, the Sunday Times reported.
Trade body UK Hospitality has previously warned that the inflation-linked tax will cost pubs and restaurants a total of £864m next April.
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